U.S. POLICY TOWARD LATIN AMERICA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP84B00049R000501100005-5
• Release Decision: RIPPUB
• Original Classification: S
• Document Page Count: 21
• Document Creation Date: December 20, 2016
• Document Release Date: July 20, 2006
• Sequence Number: 5
• Publication Date: June 17, 1982
• Content Type: MEMO

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Senior Interagency Group No. 24
- Mrs. Nancy Bearg Dyke
- Mr. Michael O. Wheeler
- Mr. Joseph Presel
- Mr. Gerald Pagano
CI -
Defense - COL John Stanford
ICA - Ms. Teresa Collins
JCS - MAJ Dennis Stanley
Treasury - Mr. David Pickford
UNA - Amb. Harvey Feldman
USTR - Mr. Dennis Whitfield
SUBJECT: U.S. Policy Toward Latin America
Attached is a revised draft of the policy study discussed
June 16 in the IG meeting on U.S. Policy toward Latin America
in the post-Falklands environment. This paper will be the
subject of the SIG to be held Tuesday, June 22, at 4:30 p.m.
It is intended that the SIG hold a discussion rather than a
decision meeting.
L. Paul Bremer, III
Executive Secretary
Attachment:
Draft Study
State Dept. review completed
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June 17, 1982
Falklands Crisis: Implications for U.S. National Interests
and Policies
The hostilities in the South Atlantic have shocked
the hemisphere and its institutions. This paper assesses
the impact on U.S. interests in Latin America and proposes
a series of measures to control the damage.
The IG agreed that managing events and preserving
U.S. options for the future were more realistic objectives
than the often elusive goal of "improving relations".
It being also the consensus of the agencies that the measures
now necessary, particularly with regard to South America,
require neither major new resources nor a shift in U.S.
strategic priorities, the paper does not employ an options
format. Rather, the paper consists of an assessment and
analysis followed by proposed courses of action consistent
with the overall thrust of current policy.
I. THE PROBLEM
US/UK opposition to Argentina's first use of force
was fully consistent with a principle widely accepted in
Latin America, where potentially dangerous historic tensions
are common (e.g., among Argentina-Chile-Peru-Bolivia-Ecuador,
Colombia-Venezuela-Guyana, Nicaragua-Colombia-Central America,
Guatemala-Belize), and where the rule of laww has traditionally
been considered the "equalizer" in the asymmetric relationship
between the "colossus to the north" and our smaller and
weaker Latin American and Caribbean neighbors. At the
same time, U.S. support for an extra hemispheric country
at war with a Latin American country, and the perceived
U.S. unwillingness to prevent the outbreak of major hostilities,
reinforced suspicions and doubts about the reliability
of the United States commitment to the peace and welfare
of this hemisphere.
The IG assumed that confrontation or at least tension
between Argentina and the U.K. will continue. Restored
British control over the Falklands is unlikely to lead
to a formal cease-fire or effective early negotiations.
Argentina will maintain its sovereignty claim and harass
the U.K. diplomatically and perhaps militarily. Britain
appears ready to fortify and develop the islands, and pos-
sibly to encourage their ultimate independence.
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II. ASSESSMENT
We conclude that the South Atlantic crisis has impaired
U.S. interests and influence quite differentially according
to country and issue. Underlying trade and finance patterns,
for example, are unlikely to be greatly affected. In addi-
tion, some of the generalized reaction is rhetorical, and
will give way with time to renewed efforts at inter-American
accommodation.
Four major categories of problems stand out:
Official state-to-state relations have been affected
quite unevenly. Our most severe problems are with
Argentina, Venezuela and Peru; Chile has attempted
to move closer to the United States; relations with
Brazil, Mexico and the Caribbean Basin have been little
affected. In geopolitical terms, the South American
environment is more fluid, increasing the importance
of Brazil.
Personal attitudes toward the U.S. are more critical.
The perception is widespread throughout the region
that our priorities lie elsewhere and hence that U.S.
support is not entirely reliable. This impact comes
less from the Falklands crisis itself, than from its
reinforcement of long-standing grievances and preju-
dices. This reaction is particularly damaging to
traditional symbols of U.S.-Latin American cooperation
and common destiny.
Our security interests and the stability of South
America have been eroded. The duration and intensity
of the fighting has created significant new pressures
to increase military preparedness and weakened (1)
the credibility of the U.S. ability to maintain hemi-
spheric peace and stability and (2) the integrity
of the Inter-American System. Both were previously
assumed to guarantee that interstate conflicts in
this hemisphere would be limited to a few days of
actual fighting.
Soviet opportunities have increased, particularly
in Argentina, where the Soviet Union will seek to
increase trade and establish an arms relationship.
In cooperation with Cuba, the Soviets are also exploit-
ing the conflict to foster Latin American differences
with the U.S. on major regional and global issues.
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The IG felt strongly that our response to these problems
should make clear that we are neither guilty of any wrong
doing nor willing to buy friendship. Nor should we behave
in a precipitate manner that suggests we can be blackmailed.
- A major problem inhibiting our ability to deal with
the new situation is the contradiction between perceived
U.S. support for British licies
especiallif the U.K.
attempts to determine the future status of the Falklands
without re erence to Argentina, and our efforts to manage
relations with key countries in South America, especially
Peru, Venezuela and Argentina. The same considerations
which have led to U.S. support for the U.K. up to now will
make it difficult if not impossible for many Latin Americans
to distinguish U.S. from British policy.
The best way to deal with this fundamental contradiction
to rebuilding U.S. interests in the region is to promote
an end to the Argentine-U.K. confrontation and a return
to the negotiating table. In particular, we should dissuade
the U.K. from prejudging unilaterally the future status
of the islands, and avoid any commitment of U.S. troops
to the islands in the absence of a U.K.-Argentine agreement.
In addition, these problems come after several years
in which we have pursued our South American objectives
with relatively little sustained engagement and very low
levels of official resources. Although the President's
vision of region-wide cooperation had led us to make efforts
to improve ties to South America, including Argentina,
our priorities have been focussed to the North. The Caribbean
Basin and Mexico should continue to receive riority atten-
tion, but the Falklands crisis has underscored the need
to also develo policies capable of sustaining a greater
degree of--cooperation with South America as well.
III. ANALYSIS
A. Bilateral Relations
In Ar entina, our materiel supply to the U.K. and
our support tor the British even after the sinking of the
General Belgrano will not be soon forgotten and could be
used to make us the scapegoats for Argentine failures.
How long this will last depends on several factors, including
internal political evolution in Argentina, U.K. willingness
to return to the negotiating table, and the degree to which
the U.S. is perceived to support a negotiated settlement
of the sovereignty dispute. Some evolution away from the
current military government is likely, but, even if a Peronist
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Government with a military supply relationship with the
Soviet Union does not develop, any successor regime will
place a very high priority on asserting Argentine sovereignty
over the Falklands. Unless the United States is seen as
willing to bring about a negotiated settlement, the prospects
for near-term im rovement in U.S.-Argentine relations are
dim and our a i ity irectly to influence that government
minimal.
We expect Argentina to develop the capacity to build
a nuclear device as rapidly as possible. This could happen
before the end of 1985 (by violating safeguards on German
and Canadian facilities), or by 1987 (using indigenously
developed unsafeguaded materials and facilities). Denial
of external inputs, particularly from Germany, could delay
this development, but will not preclude it. A decision
to test a device, however, may hinge on Argentina's assessment
of the dangers that Brazil would then feel compelled to
develop and test its own weapon.
Argentine resistance to a military relationship with
the Soviet Union has been weakened by isolation at a time
of desperate need; resistance would all but disappear if
access to U.S. and European arms continues to be denied,
or if the Soviets provide terms as favorable as those given
Peru in recent years. Our major leverage against such
a development is Argentina's financial position. Should
Argentina fail to restructure existing debt, the GOA would
be unable to purchase Western arms and would of necessity
turn to the Soviet Union.
Peru is the only American ally whose principal military
supplier is the Soviet Union, and posed special challenges
for us even before the Falklands conflict. Peru has been
the only Latin country to supply significant military support
to Argentina. The Peruvian military may seek to continue
this aid even if Argentina refuses to accept a ceasefire
and continues hostilities. This could open new opportunities
for the Soviets, either to supply new equipment to Peru
to replace that transferred to Argentina, or to use Peru
as a conduit and figleaf for supplying Soviet equipment
to Argentina. Any opposition to these moves by President
Belaunde, perhaps the most pro-American of the South American
chiefs of state, could lead to his overthrow. Any of these
developments would seriously affect U.S. interests, and
the prospect requires that we give priority attention both
to developing a diplomatic posture on the Falklands that
Peru could support, and to re-establishing a military supply
relationship with Peru that will give it an alternative
to the Soviets.
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In Bolivia there will be a foreign policy echo of
events in Argentina. Argentine influence has been and
will continue to be significant. Except during the current
Torrelio regime, the GOA has usually worked at cross pur-
poses with the U.S. Should an Argentine/Soviet arms con-
nection be established along the lines of that existing
today in Peru, Bolivia might very well follow the lead
of its two traditional regional allies, with the additional
risk that Soviet influence on Bolivian policy would be
facilitated by Bolivia's weak and corrupt institutions.
In the new environment created by the crisis in the
South Atlantic, Brazil could emerge as the new balance
wheel -- perhaps even against its will. We should encourage
a larder role for Brazil and seek to influence Brazilian
policies through development o closer bilateral ties.
The crisis is a serious setback to Brazil's efforts
to encourage a strong and stable Argentina with which Brazil
could have a non-adversary relationship. Brazilian sensi-
tivity to Argentine domestic political developments and
opposition to substantial Soviet inroads in South America
could lead Brazil to tilt further toward Argentina in an
effort to preempt the USSR.
Brazil is not ready or eager to assume the responsibil-
ities of regional power. Like the United States, Brazil
is an "odd man out" in the Spanish-speaking world, and
has growing interests in Africa and the Middle East. Brazilian
foreign policy is commercially pragmatic and politically
very sensitive to South American fears that Brazil could
act as a U.S. surrogate. Even without seeking an overt
leadership position, however, Brazil's relative economic
and military weight, institutional competence, and the
absence of territorial disputes with any of its neighbors,
give it great potential influence.
It is in our interest to foster Brazilian influence
as a complement to our own efforts. Should we fail to
entice Brazil into assuming greater responsibilities, our
own role would have to be greater, with correspondingly
greater risks of overexposure or politically undesirable
commitments (e.g., Chile).
In Central America, vested interests in ties to the
United States and cultural distance from South America
will limit effective anti-American nationalism. Nonetheless,
our ability to deal with Nicaragua has diminished. Regional
peace-keeping efforts in Central America will be more diffi-
cult to organize, with South American participation less
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likely. Tensions between Guatemala and Belize (the only
place in the hemisphere other than the Falklands where
the U.K. stations combat troops) will continue to fester
if unresolved. Argentine influence with some Central American
officers could lead to adoption of policies hostile to
the United States.
In the Caribbean support for the U.K. by all English-
speaking states except Grenada should further isolate Grenada's
pro-Cuba government, but can slow cooperation with Spanish
America bilaterally and through the CBI.
B. Attitudes
The conflict has reinforced that most potent of poisons,
the Latin American sense of inferiority and irrelevance
to our global concerns. Argentina's key psychological
weapon is a widely held belief that as "Anglo Saxons,"
we do not take Latin Americans seriously. This perception
inhibits cooperation in support of U.S. interests.
In the immediate aftermath of the crisis, some North-
South and non-aligned rhetoric is inevitable. This is
especially true of spokesmen of the more emotionally-charged
countries such as Venezuela, Panama, and Peru and those
seeking to exploit any rift between the U.S. and the Latins
(e.g. Cuba and Nicaragua). The argument that the U.S.
and the U.K., acted as racist industrialized powers cooperat-
ing to keep developing countries in their place has powerful
gut appeal. These concepts are consonant with such Falklands-
supported "lessons" as anti-colonialism, anti-imperialism,
and solidarity among the dispossessed.
These emotional-ideological currents are likely to
give a shot in the arm to nationalist-populist movements,
like Peronismo and Aprismo, and particularly their military
and le?tist variants . Efforts to organize Latin-only organ-
izations that exclude the U.S. are also more likely.
Chile, Colombia, and economic elites generally will
successfully resist pressures for more statist and national-
ist economic policies, but the rhetorical battle will be
uphill. Brazil's concerns that the United States is insensi-
tive to both its development needs and its global weight
could lead it to adopt an ambiguous position. Mexico's
anti-Americanism, always present, will continue to surface
from time to time, although the unique relationship with
the U.S. will continue to exert its control.
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The longevity or lasting effects of the current mood
-- which varies greatly from country to country (with Venezuela
and Colombia at opposite ends of the spectrum) -- will
depend on how the crisis evolves, when and how it it settled,
and what posture we adopt along the way.
At least for the moment, however, our ideological
influence is considerably reduced. Efforts by U.S. spokesmen
to employ the "Western Hemisphere Ideal," "Pan-Americanism,"
or the broader "Western Civilization" themes as proof of
a common U.S.-Latin American destiny will not prosper.
In some countries our friends are not eager to be seen
offering us an abrazo; instead, they are holding us at
arms length until the emotional level subsides.
Although Argentina was clearly hurt by the international
perception that its government is a murderous dictatorship,
the access and influence in Latin America of Anglo-American
human rights organizations have been damaged by the apparent
ethnocentrism of many of their positions.
It should be noted, however, that some regional leaders
have privately expressed the hope that we will not hold
against them the pro-Argentine stance they adopted at the
OAS, and that they hope to see a return to "business-as-
usual" normalcy as soon as possible.
C. Security Interests
A major new and potentially destabilizing factor in
the regional equation is that military institutions, through-
out the hemisphere but especially in South America, have
powerful new claims to national influence and resources.
While we expect that the general trend toward political
liberalization in the region will continue, and that finan-
cial problems will act as a constraint on military procure-
ment, the ability of governments, whether military or civil-
ian, to resist demands for modern arms has been weakened
by the crisis. Resources will be diverted from economic
development.
Even before the Falklands crisis dramatized arguments
for modern forces, seven countries -- all in South America
-- had embarked on significant weapons procurement programs
to upgrade or replace aging weapons systems. They were
Argentina, Brazil, Chile, Colombia, Ecuador, Peru, and
Venezuela. The Falklands crisis will accelerate military
procurement with an emphasis on more sophisticated all-
weather systems, m proved maintenance, greater self-suf-
ficiency and larger stocks of munitions and precision-guided
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missiles. France (and to a lesser extent the FRG, Italy,
Spain, and Israel) have the best competitive position,
but all suppliers, including the U.S., will be eligible.
Soviet opportunities will be substantial. Military indus-
tries in Argentina, Brazil, and several other countries
will be stimulated. Mexico and Central America have already
begun limited modernization programs and will be less affected.
Training and military doctrine will remain avenues
of influence. Service-to-service contacts with the U.S.
and other modern militaries will be highly sought after
and defended as a means of "keeping up technically", but
will be hedged to reduce opportunities for U.S. influence.
South American participation in formal Inter-American mili-
tary maneuvers like UNITAS will be curtailed, but probably
only for a year or two, given their usefulness as a source
of operational experience and resources.
D. Soviet-Cuban Opportunities
The Soviet Union's initial opportunity will come through
arms transfers to Argentina. The USSR subsidized military
sales to Peru, enabling the Peruvians to buy "Cadillacs
for the price of Volkwagens". In addition, Peru's ability
to make heavy army and air force purchases from the Soviet
Union without visibly losing internal or foreign policy
flexibility may lead some to conclude that Soviet political
influence -- and the cost in U.S. ties -- can be managed.
Argentina's massive grain-induced bilateral trade imbalance
with the Soviet Union provides a ready economic incentive
to both sides for an arms transfer relationship. According
to Soviet figures for 1981, the USSR bought $3.3 billion
-- mostly grain and meat -- from Argentina, while Argentina
bought only $42.5 million in Soviet machinery and nuclear
supplies. Soviet interest in gaining a military supply
position in Argentina thus appears substantial: it would
consolidate its Peruvian foothold, threaten Chile, and
assure access to badly needed grain imports.
Cuba also has an obvious interest in Argentina. But
Argentina's leaders remain conservative, and Cuba's few
new talking points are unlikely to change the geopolitical
map unless a Peronist government comes to power.
IV. PROPOSED COURSES OF ACTION
The IG concluded that the changed situation resulting
from the Falklands crisis can be managed almost entirely
within current resource limitations. Indeed, the key
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resources required ar^ intellectual energy and political
imagination to strengthen natural affinities and private
sector interests.
In considering the individual actions and options
discussed below, however, we should be aware that some
will be very controversial in terms of U.S. public-and
Con_gressiona reactions. This section therefore concludes
by considering Congressional implications.
A. Measures to Manage Bilateral Relations
1. Rebuild relations with Argentina. How quickly
we can do so will depend on whether Argentina continues
the air and naval war; but it is also true that movement
in the U.S. position may encourage Argentina to withhold
further military action and accept a formal ceasefire.
The most effective step in this direction would be for
us to work with the U.R. to encourage the resumption of
negotiations with Argentina over the Falklands. Should
the U.C. not do so, we should make clear that we have no
position on the issue of sovereignty.
Our immediate task is to ensure, in the emotional
aftermath of the Stanley surrender, that neither side takes
decisions that would prejudice a final resolution of the
Falklands issue.
-- If Argentine military action continues, we should
privately ask key Latin American countries to bring pressure
on the Argentines. This will be effective, however, only
if we are prepared to convey willingness to pressure Britain
to negotiate with Argentina.
-- If Argentina accepts a de facto or formal ceasefire,
we should immediately respond by lift ng our military and
economic sanctions, noting that Resolution 502 has been
complied with. This move should be coordinated with Con-
gress, the EC, and NATO as well as the U.R. Ideally, our
move should come first.
We should also ensure that we are perceived in Argentina
as working to help Argentina get a basically creditworthy
economy back on track. We should encourage sound economic
policies, a restoration of traditional trade patterns,
and reestablishment of international creditworthiness.
2. Reduce Argentine dependence on the Soviet grain
market. The USSR has become a major customer for Argentine
grains, but is not a consistent buyer. When the Soviet
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demand is high, Argentina is assured badly needed revenue.
But if the USSR demand declines significantly and abruptly
(as has happened) the Argentines may resort out of desper-
ation to barter arrangements (grain for arms). It is there-
fore in the U.S. interest to promote diversified markets
for Argentine grain exports.
3. Develop a policy toward Argentine rearmament to
preempt Soviet sa es. (A) Raise no objection in principle
to Brazil, Israel, and Western European suppliers, parti-
cularly the FRG, Italy, Spain and France, to preempt Soviet
and Arab arms sales to Argentina. (B) Consider certifying
Argentine eligibility for U.S. military aid and sales as
soon as Argentina has agreed to a ceasefire, if we have rea-
sonable assurance that Argentina will not again violate
the Arms Export Control Act, and if we have also found
a way to certify sales to Chile (see 4, below). Argentina
is unlikely to rely on the U.S. as a supplier in any event,
but certification will be politically important and could
slow a turn to the USSR or the radical Arabs. We expect
major Congressional resistance to certification.
4. Chile. We have a major interest in preserving
.the balance of power between Argentina and Chile. Despite
recent events, it may still be easier to certify Argentina
than Chile. Letelier/Moffitt causes special difficulties
in the Chile case, and there is greater congressional oppo-
sition on human rights grounds. To go ahead with Argentina
but not Chile could cost us heavily with one of the few
South American states where our relations are presently
undamaged, including the loss of any opportunity to moderate
the Chilean military buildup or its human rights practices.
Certification and the resumption of aid and sales to Chile
is our goal; the timing must carefully weigh these issues.
Continue to work with key suppliers, especially the FRG,
to minimize Argentine opportunities to acquire nuclear
technology free of safeguards. Give priority to reaching
an understanding with the PRC, whose established nuclear
relationship with Argentina is unconstrained by the NPT
or other formal arrangements. Although our influence within
Argentina will be minimal in the foreseeable future, we
should not abandon efforts to convince Argentina that nuclear
devices will degrade, not enhance, Argentine security.
6. With Brazil, our goal could be to develop a rela-
tionship in which both countries act to contain and hopefully
resolve potential conflicts -- not necessarily in concert,
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but with the full and shared knowledge that stability must
be maintained. To overcome Brazilian sensitivities to
overly close public association with us will require dis-
cretion and patience. In expanding the Brazil relationship,
moreover, we should attempt to avoid contributing to Argentine
insecurities. Key steps could include:
-- consulting closely and regularly in both Washington
and Brasilia on the means to maintain a stable
regional balance of power. We would make clear
that we believe this can only be achieved over
the long haul if we do not work at cross purposes.
Brazil would want to consult on a wide range
of issues; we should agree. What we could each
do to maintain the balance between Chile and
Argentina might be an important initial topic
for exploration.
improving and broadening regular intelligence
exchanges;
inviting Brazil, as the seventh largest economy
in the free world, to participate in the next
economic summit. Acceptance would be unlikely,
but the gesture would make the point we take
Brazil seriously.
developing a closer relationship to the Brazilian
nuclear program including resolution of the nuclear
supply problem (which would require Brazilian
acceptance of a full safeguards regime or changes
in U.S. law) would be important signals of our
acceptance;
cultivating military-to-military contacts and
relationships, including naval cooperation and
some weapons co-production (with the controls
required by U.S. law on re-export);
strengthening cooperation in science and technol-
ogy; and
addressing Brazil's grievances over U.S. sugar
quotas and dealing with Brazil's perception that
U.S. policies on GSP and MDB graduation reflect
U.S. insensitivity to Brazil's economic problems.
On sugar, we will need to adjust the quota system
to allow for growth in exports to the U.S. On
GSP graduation, we must take care to minimize
damages to the Brazilian exports. On MDB gradua-
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tion we should seek opportunities to reiterate
at the senior level that we support flexible
application of this MDB policy in which a country's
regional income disparities and other unique
problems and needs are taken fully into account.
7. Increase U.S. cooperation in science and technology
(a) with the governments of the Andean Pact, Argentina,
Brazil, and Chile and (b) with their private sectors.
A number of countries, especially Brazil, are ready for
productive cooperation to mutual advantage. Such a program
would coincide with the desire to strengthen indigenous
R & D capability in the wake of the Falklands Crisis.
Existing U.S. government programs are spread among various
agencies (NASA, Energy, Transportation, NIH, AID, Agriculture).
Although they are affected by policy decisions, they often
escape policy consideration and are often not coordinated
with private sector, university; and research institute
activities. The Department could sponsor an early confer-
ence, hosted and run by the NSF, of representatives from
U.S. industries and research institutes involved in R
& D to consider areas where cooperation between the U.S.
and Latin America might be expanded, including Space, Bio-
technology, Physics, Chemical Engineering, Education, Agri-
culture, Health, and the Environment. Using ideas outlined
in the conference, an expanded program combining inter-
agency cooperation, private sector support, and a compre-
hensive view of past R & D programs could be launched.
8. Be as bilaterally responsive as possible to indi-
vidual countries, including efforts to prevent past tensions
from coloring future_ relations if conditions permit (Chile,
Uruguay, Bolivia). Continued cooperation with the Andean
countries should reduce the costs of the Falklands crisis
to our interests there. Modest assistance efforts should
be sustained in Bolivia, Peru, Ecuador, Paraguay to limit
the repercussions of Argentine economic weaknesses. More
importantly, economic measures with direct negative conse-
quences to particular countries (e.g., silver sales and
Peru) should be reviewed carefully on their merits. We
should also be particularly sensitive to the need to imple-
ment the terms of the Panama Canal treaties, to avoid this
becoming an issue in the current environment.
B. Measures to Deal With Impact on Attitudes
1. Reiterate justification for our action. The best
and only stance for us is to hold to t Fe correctness oT-
our opposition to the first use of force, continue to explain
our policy not in terms of a choice between Europe and
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Latin America but rather of adherence to the rule of law,
and back that up with actions that demonstrate commitment
to Latin America. We should avoid giving the impression
that we believe that our relationship with Latin America
has been irrevocably undermined. This, or any indication
of a sense of guilt or remorse, would simply fuel the emo-
tional fires in places like Caracas and Lima. As the dust
settles, our principled support for the rule of law will
become more widely accepted.
2. Following through on the CBI is more vital than
ever. The CBI is critical to our position in Central America
and the Caribbean and provides a point of contact to Venezuela
and Colombia. Our failure to live up to the expectations
we have created would provide further evidence that the
hemisphere is relatively low on our scale of priorities.
Efforts to bridge the gaps between the Commonwealth Caribbean
and Spanish America should be intensified. Continue to
press the U.K. to increase economic assistance and defer
new moves to grant independence to Caribbean dependencies.
3. Encourage symbolic ties that emphasize U.S. interest
in Latin America. The most important step would be to
assiduously cultivate individual leaders, through the kind
of special attention they deserve and appreciate: a streng-
thened/expanded program of visits to and from Washington
by chiefs of state and other high level officials; entree
to high places when Latin leaders come to Washington.
Other possibilities, which would have to be carefully vetted
in coming months to avoid counterproductive reactions,
might include:
Establishing a Presidential Commission on U.S.
interests and policies in South America to develop
a stronger U.S. consensus and to symbolize
U.S. interest in driving a reliable new bargain
for hemisphere relations. The Commission could
include members or staff from Congressional,
economic, defense, hispanic, and academic consti-
tuencies.
Use the Commission to prepare the groundwork
for a Presidential visit to South America, possibly
in conjunction with the 200th anniversary of
Bolivar's birth July 24, 1983.
Schedule travel to South America by high level
USG officials not identified in the Latin mind
with our policy of support for the British. -
Possibilities include Judge Clark, Ambassador
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Middendorf, Ambassador Kirkpatrick, AID Admini-
strator MacPherson, Senators Percy and Baker,
Representatives Wright, Lagomarsino, Zablocki,
Gilman.
Establish Interparliamentary Commissions with
the Congresses of selected South American coun-
tries, patterned after the Mexican model. Pos-
sibilities include Brazil, Colombia, and further
down the road, Veneuzela.
4. Cultivate multilateral diplomacy to complement
our bilateral moves and reduce suspicions that we are trying
to "divide and conquer." Maintain an active OAS presence,
but focus initially on improving cooperation with subregional
groupings, like the Central American Democratic Community,
the Andean Pact, the Amazon Basin group, or the Cuenca
de la Plata group, and on inter-American military ties.
Another option might be to encourage initia-
tives, preferably by others, on the peaceful settlement
of current territorial disputes. Still another possibility
might be to plan now for a strong U.S. role at this year's 25X1
scheduled Special OAS General Assembly on Cooperation for
Development (without, however, implying commitment of major
new economic assistance to the region.)
5. Strengthen ties to key political movements. In
Venezuela, for example, the Christian Democrats and the
Social Democrats both have international contacts that
will give their views additional impact. But any appearance
of a U.S. choice between them would be highly counterproduc-
tive.
6. Promote discriminating and substantive exchange
programs between U.S. and Latin American Chambers of Com-
merce, think tanks, universities and other national insti-
tutions particularly in technical fields. Full use should
be made of the talents of leading private sector organiza-
tions like the Americas Society. One objective would be
to recover some of the ties between technocrats lost with
the termination of AID training programs in South America
in the 1970s. Other exchanges should have the objective
to broaden Latin American awareness of our global concerns.
7. Move forward in a low-key fashion on the Secretary's
St. Lucia proposal to create a institute for democracy.
Though originally proposed as an OAS activity, and perhaps
today most practicable within the Central American Democratic
Community, the Andean Pact, or some other sub-regional
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basis, the project would be best received if presented
as part of a global initiative.
C. Measures to Enhance Regional Security Interests
1. Utilize full potential of U.S. arms transfer oli-
cies as set forth in NSDD-5 to meet requests from the major
South American countries, with particular emphasis on modern
systems, communications, and technology. Where it is to
our political and strategic advantage and would enhance
regional stability, we should consider making the first
aitroduction of new systems into the region, and selling
more advanced systems than we have in the past. We will
not be able to regain our position as the region's primary
supplier in the face of aggressive West European and Soviet
marketing with concessional financing, but the attractiveness
of some of our technology (e.g., missiles, fighter aircraft.;
should keep us in the game. The key, except perhaps for
Peru, should not be the provision of significant security
assistance, resources (we have in any case had no materiel
grant assistance to South America's key nations since 1968),
but the development of a policy that can be defended as
respectful, restrained and non-discriminatory.
2. Give priority to obtaining Congressional approval
of the Special Defense Acquisition Fund (SDAF), with adequate
capitalization and authority to meet the needs of the develop-
ing countries as well as the industrial powers. (We could
have sold the A-37 to four or five Latin countries, pre-
empting more costly aircraft, if the Cessna production
line were still open.)
3. Consider co-production arrangements with Brazil,
and perhaps symbolically on some weapons with the Andean
Pact. Latin America will be looking increasingly to develop
its own material production. Co-production or licensing
arrangements could take some years to develop, but could
enable us to short-circuit some of the cost, leadtime,
and bureaucratic delays that plague U.S. sales. More imnor-
tantly, even if no viable arrangements could be found,
the offer would be symbolically important and give us a
concrete subject for policy discussions and subsequent
cooperation with Brazil. Only a major, high-level effort
will get this off the ground. (A major sticking point
ws.ll be U.S. control over re-export of U.S. components
to, e.g., Iraq.)
4. Expand military exchange programs. Give priority
to Congressional enactment of provision in foreign aid
authorization bill (now awaiting floor action in both houses)
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expanding DOD authority to provide no-cost training in
U.S. military schools to countries providing such training
to U.S. officers. While removing an irritant in our rela-
tions with Brazil, where we have not been able to repay
Brazilian training of U.S. officers, the authority being
sought could permit the expansion of reciprocal training
in other Latin American countries. Personnel Exchange
(PEP) programs in Latin America, for which no new legislation
is needed, should also be expanded and given higher priority.
Embassies in countries where the military play a major
political role should be directed to nominate military
officers for ICA's international visitor program.
5. Increase IMET and expand and upgrade the U.S.
Military Schools in Panama. Promote U.S. military training
and doctrine in Latin America through a revitalization
of the U.S. Military Schools in Panama and similar mechanisms
(e.g., exercises, unit exchanges and mobile training teams).
6. Direct the Arms Transfer Management Group to review
inter-agency procedures for responding to arms transfer
requests to reduce delays in providing policy approval
and P&R/P&A data. Prompt decisions, even when our policy
requires disapproval of the proposed transfer, improve
our reputation as a supplier.
D. Measures to Deal with Threat of Soviet/Cuban Inroads
1. The best defense against Soviet/Cuban exploitation
of the Falklands crisis is to take decisive action to protect
U.S. interests and reestablish U.S. influence where damage
has occured, thereby reducing incentives for a turn to
the USSR. Such actions include the whole range of recom-
mendations included in this paper.
2. Keep the pressure on Cuba without attempting to
force a rapid denouement, recognizing that the regional
environment is not propitious to U.S. "power plays". One
exception might be Namibia. Hinder further development
of Argentine-Cuban ties.
3. Reduce Peruvian military ties to the Soviets.
Because of Peru's economic situation, concessional fin-
ancing is essential if U.S. equipment is to compete with
Soviet offers. A $30 million FMS financing program,
including $25 million concessional terms, has been proposed
to inclusion in the FY 84 security assistance budget
and should be assigned a high priority. While the recom-
mended level would be five times our FY 83 program for.
Peru, it is consistent with the levels of FMS financing
offered Peru in the mid-70's.
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4. Argentina. See above, IV.A.3.
E. Congressional implications
Our strategy in dealing with the public and Congress
should emphasize heavily the following points:
-- we have a new situation in Latin America which
requires new policies to protect U.S. interests;
-- these policies do not involve a commitment of
significant new resources, except in the case
of Peru;
-- some changes in attitudes and legislation are
required to permit development of cooperation
and restraining leverage in military, nuclear
and technological relationships.
A revitalized arms transfer policy is needed to
provide hemisphere cooperation and defense in times of
crisis and to strengthen inter-American solidarity.
We would prefer to keep arms procurement at a low level,
but where imbalances occur we must act to stay in the
game, avoid possible outbreaks of hostilities and prevent
possible Soviet inroads.
We will have to explain to Congress how the new
situation and our interests demand that we be prepared
to assist countries in maintaining regional balances
of power within the context of our arms transfer policies.
For example, we will be unable to compete effectively
with the Soviets and Europeans in the military arena
without some changes in U.S. law, and public and Congres-
sional attitudes. This may prove difficult since Latin
American drives to acquire modern equipment traditionally
create conflictive dynamics with the United States.
Congress and much informed opinion in the U.S.are opposed
to sales as unnecessary, counterproductive, wasteful,
and supportive of militarism.
In the post-Falklands environment, U.S. unresponsive-
ness to the demand for new and better arms and equipment
would not result in the denial of modern weaponry. Rather,
it would reduce U.S. influence and prestige in matters
that many South Americans who are not military will con-
sider vital to their national security. To influence
procurement needs and the related rethinking of security
interests and needs, we will need to make full use in
dealing with Latin America of the more responsive arms
transfer policies established by the Reagan Administration,
and build Congressional support for such use.
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I. ARMS TRANSFERS TO LATIN AMERICA AFTER THE FALKLANDS
II. U.S. STRATEGY IN POST-MALVINAS SOUTH AMERICA: PURSUING
THE BRAZILIAN OPTION
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DDT Talking Points For Falkland SIG Meetinq
1. We agree with the assumption in the draft paper that
"confrontation or at least tension between Argentina and the U.K.
will continue." Possession of the Falklands remains an integral
part of. Argentine history and geo-political thinking: they are
crucial if Buenos Aires is to be a major force in the South
Atlantic and pursue its claims to the Antarctic and to the
mineral wealth offshore. Moreover, keeping the issue on the
front burner would serve domestic political needs, placating
those across the political spectrum who want to see the islands
under Argentine sovereignty.
2. While we do not rule out a renewal of military activity,
it is becoming increasingly unlikely.
-- The consensus within the military high command favors an
end to hostilities and a shift to the diplomatic arena.
is
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-- The losses sustained during the war would limit the
military's ability to carry on the struggle.
Any military action would likely he inconclusive, and
the steady attrition of Argentine forces would erode the
government's support.
-- And other Latin American countries, anxious to contain
damage to hemispheric unity and ties with Western
Europe, would urge a return to the negotiating table.
3. These political costs and potential further materiel
losses at least for now will encourage Buenos Aires to pursue a
diplomatic course. We agree, however, that without a guarantee
that British forces will be withdrawn, Buenos Aires is unlikely
to agree to a formal cease-fire. Instead, it will try to force
the dispute back into the United Nations and press for a UN-
mediated formal cessation of hostilities and negotiations on the
ultimate status of the islands. The Argentines believe that the
prolonged presence of a large British force coupled with London's
intransigence on key issues relating to sovereignty will enhance
Buenos Aires' bargaining position.
4. We also agree that in the short run, the Thatcher
government will be extremely reluctant to "internationalize" the
Falklands question or resume talks with Argentina--whether or not
Buenos Aires instigates new military action. London will proceed
with plans to develop the economy, keep a moderate-sized military
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CONFIDENTIAT, NOFORN
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force in the South Atlantic, and grant the Falklanders a greater
measure of autonomy except in the area of defense and foreign
affairs.
5. If Argentina were to resume military moves against
British forces in the area, London would commit whatever military
power were needed to defend its sovereignty over the islands.
This would unify the Conservatives, give the opposition little
opportunity to press for a more "open" policy, and encourage
public opinion to support a strong government response.
6. In the longer run, the spectre of a "Viet Nam-like" war
of attrition against British forces in the South Atlantic could
eventually take its toll on public opinion, foment dissension
within the Tory party, and increase the calls by Britain's allies
for a negotiated settlement. Pressure for a more conciliatory
approach will grow even if Argentina foresakes military action as
the costs of rehabilitating the islands and maintaining an
adequate defense force in the area become clear.
7. After an interval of a year or two, which could be
shortened by the kind of pressures noted above, Thatcher may be
amenable to a UN or OAS effort--including Argentine
participation--to develop the islands as long as it did not
substantially alter British sovereignty. Ultimately, she might
also be willing to consider international. security guarantees
provided this were in accord with the wishes of the Falklanders
and the UK were one of the major guarantor powers.
CONFIDENTIAL NOFORN
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